The reality of the situation is that the water co's can't afford to rectify the situation because for decades they've marked their own homework, failed to plan for future needs, and given their profits away to their owners. Now, functionally bankrupt, they're valued at £100b by Labour. True value =0
Why do the reckless banks who lent them £75 Billion without any due diligence - knowing they were paying it out in dividends rather than investing it in water infrastructure (which was the basis of the loans) - deserve bailing out or a penny in compensation?
They don’t deserve anything but, due to the idiocy of the privatisation, they own the assets ie the infrastructure to deliver citizens with water. Unless they go bankrupt the government has no legal right to step in. If the Govt indicate that they will change the law to step in, there will be …
the mother of all legal battles which, in the meantime, means no improvement in services and, the investment community will likely wait for the outcome before investing in any other UK infrastructure. It’s an unholy mess created 40 years ago and almost impossible to get out of.
Actually there's a clause in the original legislation which means that if the companies are no longer going concerns all of the assets return to public ownership. If the 'investment community' ceases to invest in vulture capitalists who immediately turn loans into dividends that's no bad thing
Well looks like Thames will go bankrupt and the Govt will step in to take over the assets - as it's entitled to under the original privatisation act. But only 'temporarily' as they continue to insist. So why only 'temporarily'? What's the justification for privatising it all over again?
The value of the water Co's is assets - liabilities. So given their leveraged debt burden, not much at all, if anything. Don't forget, they're over-valuing the infrastructure. Through lack of maintenance or investment, it's not worth anything like £100b plus liabilities.
Agreed. But having decided they didn’t want to go down the privatisation route, they’re doing the typical politician thing of using the highest estimate available.
So to loop us back to the beginning, might that not justify a fair bit of Sharkey's ire?
It might. I wasn't commenting on the fairness or not of the ire, just the over-the-top, scripted, self-conscious "MIC DROP!" style, the childishness of demanding the SoS resign, and how effective that might be at influencing those he wants to influence - prinicipal among them, the SoS in question.
The £100bn valuation came from a report produced by a think tank made up of reps from 4 water companies (according to Sharkey) so is hardly impartial
And Labour are quoting that figure as a reason not to nationalisr.